By Whitney Strotz, Cassidy Turley
The balance of power in the office market in southern and central Marin County continues to move in favor of landlords.
We have seen much of the quality space disappear with asking rents continuing to increase. The vacancy rate remained mostly flat for 2012, but we saw the average monthly asking rate jump nearly 10 percent in southern Marin to $3.32 per square foot from $3.04. Central Marin rents are even higher, averaging $3.52.
The combined vacancy rate for southern and central Marin closed out the year at 11.1 percent — slightly above the historical neutral balance point of 10 percent.
However, two sizable Mill Valley properties — Belvedere Place and 100 Shoreline Highway — have large blocks of space and the landlords apparently are looking for larger tenants. Removing those complexes from consideration, the submarket vacancy rate drops to 8.2 percent.
That’s a more accurate reflection of the experiences of most tenants in the market. Finding hidden nuggets and unique values for tenants is becoming more challenging, leaving more opportunity for local commercial real estate agents to provide value for clients.
The best-quality spaces in terms of views and visibility are garnering rents over $4 a square foot. The highest rent transactions approach the $5 range.
However, when compared to areas like San Francisco, true occupancy costs in southern Marin — inclusive of parking costs, gross receipts taxes, commuting costs and initial buildout expenses — remain lower. As always, the most successful organizations are looking beyond base rental rate to analyze the best options for their businesses.
Looking forward into 2013, we are tracking an increase in demand over historical levels. Over 80 percent of the prospective space users we are tracking are looking for larger premises to accommodate anticipated increased head count. Interestingly, the trend continues to be toward more open work spaces to create more collaborative work environments.
To be effective in these open areas, however, businesses have to create different types of areas for private calls and semiprivate meetings. Space planners and furniture vendors are becoming more valuable in this process.
|Fourth quarter 2012|
|Building base (s.f.)||Available (s.f.)||Vacancy||Asking rent|
|Central & Southern combined||2,486,938||276,481||11.1%||$3.41|
|Central & Southern combined without two large properties||2,325,323||190,462||8.2%|
Source: Cassidy Turley research
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